MARIE D. SORENSON, ETC., PETITIONER V. SECRETARY OF THE TREASURY OF
THE UNITED STATES AND THE UNITED STATES OF AMERICA
No. 84-1686
In the Supreme Court of the United States
October Term, 1985
On Writ of Certiorari to the United States Court of Appeals for the
Ninth Circuit
Brief for the Respondents
TABLE OF CONTENTS
Opinions below
Jurisdiction
Statutes involved
Statement
Summary of argument
Argument:
An amount due to be refunded to an individual
because of an earned income credit may be intercepted
by the IRS and applied to discharge that
individual's past-due child support obligations
A. Because an excess earned income credit is
defined as an overpayment of tax, and because it
is paid to the recipient as a refund of tax, it is
subject to interception under the plain language
of the relevant statutes
B. The construction dictated by the statutes' plain
language is supported by related statutory provisions
and by the overall statutory scheme
C. Considerations of equity and social policy are
consistent with a plain-language construction of
the statutes
Conclusion
Appendix
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. A1-A21) is reported
at 752 F.2d 1433. The opinion of the district court (Pet. App.
A25-A67) is reported at 557 F. Supp. 729. The order of the district
court (Pet. App. A22-A24) is unreported.
JURISDICTION
The judgment of the court of appeals was entered on February 5,
1985. The petition for a writ of certiorari was filed on April 24,
1985, and was granted on June 17, 1985. The jurisdiction of this
Court lies under 28 U.S.C. 1254(1).
STATUTES INVOLVED
The relevant portions of Sections 43, 6305, 6401, and 6402 of the
Internal Revenue Code of 1954 (26 U.S.C. (1976 ed. & Supp. V 1981)),
and of Sections 452 and 464 of the Social Security Act, 42 U.S.C.
(1976 ed. & Supp. V 1981) 652 and 664, as in effect during 1981, are
set out in a statutory appendix (App., infra, 1a-9a). Unless
otherwise noted, all statutory references are to the 1981 versions of
the statutes. The term "I.R.C." will be used to refer to the version
of the Internal Revenue Code currently in effect.
QUESTION PRESENTED
Whether an amount due to be refunded to an individual because of an
earned income credit may be intercepted by the IRS and applied toward
the individual's past-due child support obligations.
STATEMENT
1. Congress established the Aid to Families With Dependent Children
(AFDC) program in 1935. Social Security Act, ch. 531, Tit. IV,
Sections 401-406, 49 Stat. 627-629. "The category singled out for
welfare assistance by AFDC is the 'dependent child.'" King v. Smith,
392 U.S. 309, 313 (1968). A "dependent child" is a needy child who
has been deprived of parental care and support by the death,
incapacity or "continued absence from the home" of a parent (42 U.S.C.
606(a)). The purposes of the program are to strengthen family life,
to facilitate the care of dependent children in their own homes or in
the homes of their relatives, and to help such parents or relatives
attain the highest degree of self-sufficiency "consistent with the
maintenance of continuing parental care and protection" (42 U.S.C.
601).
As a condition of eligibility under the AFDC program, an applicant
for financial assistance must assign to the state any rights to
support that he or she may possess (42 U.S.C. 602(a)(26)). Typically,
the applicant for assistance will be the child's mother, and her
rights to support will run against the child's father, to whom she may
or may not have been married. See S. Rep. 93-1356, 93d Cong., 2d
Sess. 42 (1974). If the noncustodial parent becomes delinquent in his
child-support payments therefore, he becomes indebted to the state
that has furnished AFDC assistance to his dependents.
In 1981, Congress enacted legislation to assist states in
collecting delinquent child-support payments thus assigned to them.
By concurrent amendments to the Social Security Act and the Internal
Revenue Code, Congress directed the Secretary of the Treasury to
"intercept" tax refunds owed to delinquent non-custodial parents and
remit those sums to the states. Omnibus Budget Reconciliation Act of
1981, Pub. L. No. 97-35, Section 2331, 95 Stat. 860 (codified at 26
U.S.C. 6402 and 42 U.S.C. 664). In this manner, the states are
reimbursed, at least in part, for the cost of furnishing support that
the delinquent parent neglected to provide.
2. Petitioner is a married woman who lives in the State of
Washington. Her husband was previously married, and his child by that
marriage is a "dependent child" in the custody of his former wife
(Pet. App. A4, A26). When petitioner's husband fell behind in his
child-support payments, he became indebted to the State of Washington,
which had provided financial assistance to his ex-wife and child under
the AFDC program (ibid.).
In February 1982, petitioner and her husband filed a joint federal
income tax return for 1981 (Pet. App. A4). Although the income
reported on the return came exclusively from petitioner's wages
(ibid.), she and her husband elected to file a joint return in order
to benefit from the lower tax rates applicable thereto. See 26 U.S.C.
1(a) and (d). On the return, petitioner and her husband claimed a
refund of $1,408, consisting of excess tax withheld from her wages and
an "earned income credit" (Pet. App. A4; see 26 U.S.C. 43). They did
not receive the expected refund. The IRS withheld payment so that the
refund could be remitted to the State of Washington to offset the
amount petitioner's husband owed that State in consequence of his
failure to pay child support (Pet. App. A4).
On April 14, 1982, petitioner's counsel mailed a letter to the IRS
reiterating her request that the $1,408 be released (Pet. App. A11,
A27). The IRS ultimately notified her that her claim for refund had
been allowed to the extent of her one-half interest in the joint
refund under Washington community property law. The IRS advised her,
however, that the other half of the refund, representing her husband's
community share, had been retained for payment to the State (id. at
A5, A11-A12, A57-A57).
After receiving informal notification that her refund claim had
been partially denied, petitioner brought this action in the United
States District Court for the Western District of Washington (Pet.
App. A4, A12-A13). She contended, inter alia, that a refund
attributable to an earned income credit is not an "overpayment" of tax
and hence may not be intercepted and used to pay past-due child
support (Pet. App. A41-A43; see 26 U.S.C. 6402(c)). On behalf of
herself and her husband, she requested that the intercepted half of
the earned income credit be released (Pet. App. A10-A13, A41-A43).
She also sought certification of the suit as a class action and
requested, on behalf of herself and the class, injunctive relief and a
declaration that earned income credits are outside the purview of the
tax refund intercept program (id. at A13-A14). More broadly,
petitioner challenged the interception of the tax refund on various
state law and procedural due process grounds (id. at A44-A45,
A54-A55).
The district court rebuffed several jurisdictional contentions
interposed by the government (Pet. App. A33-A39) /1/ and certified the
case as a class action (id. at A41). /2/ Turning to the merits, which
were presented on cross motions for summary judgment (id. at A66), the
court rejected petitioner's state law arguments, concluding that the
IRS could reach her husband's one-half interest in the joint refund
under Washington community property law (id. at A43-A54). /3/ The
district court likewise ruled for the government on the earned income
credit issue, holding that, under the plain terms of the relevant
statutes, earned income credits are deemed to be "overpayments" and
hence are subject to interception in the same manner as actual
overpayments of tax (id. at A41-A43, citing 26 U.S.C. 6401(b) and
6402(c)). And while rejecting the bulk of petitioner's due process
claims (Pet. App. A63-A66), the district court noted that the IRS may
properly intercept only that portion of the overall refund (including
any earned income credit) that belongs to the spouse whose
child-support payments are in arrears (id. at A58). The court agreed
with petitioner that nonobligated spouses might be unable to protect
their rights absent notice of this fact, and ordered the IRS to
provide "adequate notice" to all class members (id. at A61-A63, A67).
/4/
3. The court of appeals affirmed the district court in all respects
(Pet. App. A1-A21). Petitioner's sole contention on appeal was that
earned income credits are outside the scope of the tax refund
intercept program (id. at A5-A6). She argued that an earned income
credit is neither a "refund() of Federal taxes paid" (42 U.S.C.
664(a)) nor an "overpayment to be refunded" (26 U.S.C. 6402(c)), but
rather is in the nature of a grant of funds through the refund
mechanism of the Internal Revenue Code (Pet. App. A16). She
emphasized that persons with no federal tax liability are eligible to
receive earned income credits.
The court of appeals unanimously rejected petitioner's argument
(Pet. App. A14-A21). It pointed out that the Social Security Act
permits interception, not merely of "tax refunds," but of "any
amounts, as refunds of Federal taxes paid, (which) are payable" to a
person delinquent in child support (id. at A15-A16, quoting 42 U.S.C.
664(a). And it pointed out that the parallel provisions of the
Internal Revenue Code authorize interception of "any overpayment,"
with "overpayment" being defined to include the amount of any excess
earned income credit due to be refunded to an individual (Pet. App.
A16-A20, quoting 26 U.S.C. 6401(b) and 6402(c)). The court concluded
that there was "nothing in the (statutory) language * * * or the
legislative history of the earned income credit which would indicate
that Congress intended that the * * * credit be treated differently
than other funds that are classified as 'overpayments' and paid as a
tax refund" (Pet. App. A21). It accordingly held that earned income
credits are within the scope of the tax refund intercept program. The
court acknowledged that its holding conflicted with Rucker v.
Secretary of the Treasury, 751 F.2d 351 (10th Cir. 1984), and Nelson
v. Regan, 731 F.2d 105 (2d Cir. 1984), cert. denied, No. 84-33 (Oct.
1, 1984), but expressed the view that those circuits had
"misinterpreted the statute" (Pet. App. A20).
SUMMARY OF ARGUMENT
Congress enacted the tax refund intercept program in 1981 as
equitable and low-cost alternative to other, more traditional methods
of collecting child-support debts. The language of the statutes, the
overall statutory scheme, and considerations of legislative policy
make it clear that refunds attributable to earned income credits, like
all other species of tax refunds, are covered by this program.
1. The earned income credit is a "refundable credit." The
provisions that empower the IRS to make refunds of earned income
credits are Sections 6401 and 6402 of the Code. Section 6402(a)
authorizes the Commissioner to refund an "overpayment" of tax.
Section 6401(b) provides that an excess earned income credit -- that
is, the amount by which such a credit exceeds the tax otherwise due --
"shall be considered an overpayment." It is these two provisions that
enabled the Commissioner to refund to petitioner her one-half
community share of the earned income credit that she and her husband
claimed on their 1981 joint tax return.
Congress established the tax refund intercept program by amending
Section 6402 of the Code and by adding Section 464 to the Social
Security Act. Section 6402(a) as amended in 1981 provides that the
refund of any overpayment shall be made "subject to subsection (c)."
Section 6402(c), newly enacted in 1981, in turn provides that "(t)he
amount of any overpayment to be refunded * * * shall be reduced by the
amount of any past-due support." The necessary effect of this
integrated statutory scheme is to authorize the refund of any excess
earned income credit, but, at the same time, to require that the
amount of any such refund be reduced by any past-due support for which
the recipient is liable.
Section 464(a) of the Social Security Act leads inevitably to the
same result. It requires the offset of any past-due child support
against "any amounts, as refunds of Federal taxes paid, (which are
payable" to a delinquent. As shown above, amounts payable to
individuals on account of excess earned income credits are payable "as
refunds of Federal taxes paid." There is no other way in which such
amounts can find their way into a taxpayer's hands.
2. The overall statutory scheme supports this plain-language
construction of the statutes. Section 6305 of the Code, enacted in
1975, empowers the IRS to collect delinquent child support "in the
same manner * * * as if such amount were a (delinquent) tax" (26
U.S.C. 6305(a)). This provision clearly authorizes the IRS to levy
upon an earned income credit, once it has been refunded to a
delinquent, and remit that amount to the state to which he is
indebted. Nothing in the Code exempts earned income credits from
levy. Petitioner's argument would thus require the IRS to mail the
delinquent a check for the earned-income-credit portion of his refund,
then turn around and take whatever collection action is necessary to
get that money back from him. Congress is unlikely to have intended
that the IRS go through these motions when interception at the source
would accomplish the same result more efficiently.
3. Considerations of social policy amply support Congress's
decision to authorize interception of earned income credits. Congress
has long been concerned about the problem of parents who fail to honor
their child-support commitments -- a problem that in Congress's view
has been largely responsible for the "rapid and uncontrolled growth of
families on AFDC." S. Rep. 93-1356, 93d Cong., 2d Sess. 44 (1974).
Congress believed that interception of tax refunds would be a method
of collection less expensive for the government, and less onerous for
delinquent parents, than such ancient creditors' remedies as
garnishment, seizure of property, and judicial sales. To insist that
earned income credits be immune from interception, and that they
instead be refunded to taxpayers and seized by these other means,
would purposelessly increase the costs of collecting child support.
Since those collection costs would be borne by the social welfare
system in any event, the result petitioner urges would not do anyone,
least of all the poorer members of our society, any good.
ARGUMENT
AN AMOUNT DUE TO BE REFUNDED TO AN INDIVIDUAL BECAUSE OF AN EARNED
INCOME CREDIT MAY BE INTERCEPTED BY THE IRS AND APPLIED TO DISCHARGE
THAT INDIVIDUAL'S PAST-DUE CHILD SUPPORT OBLIGATIONS
When Congress enacted the AFDC program in 1935, it recognized that
a principal cause of children's becoming dependent was the "continued
absence (of a parent) from the home." Social Security Act, ch. 531,
Tit. IV, Section 406(a), 49 Stat. 629. It was not until 1950,
however, that Congress took affirmative steps to hold responsible
those parent who, by abandoning or deserting their children, caused
the children to rely on AFDC funds for support. Social Security
Amendments of 1950, ch. 809, Section 321(b), 64 Stat. 549-550. Since
1950, Congress has enacted a variety of measures aimed at "securing
support from the deserting or abandoning parent in every possible
case." H.R. Rep. 544, 90th Cong., 1st Sess. 100 (1967). These
measures have required the federal government to play "a far more
active role * * * in undertaking to give direct assistance to the
States in locating absent parents and obtaining support payments from
them." S. Rep. 93-553, 93d Cong., 1st Sess. 6 (1973).
Congress enacted the tax refund intercept program in 1981 because
it concluded that these earlier steps had proven ineffective. The
program is a modern, fully-automated system for identifying assets of
persons who are delinquent in their child support obligations, and
remitting those assets directly to the states to which such
individuals are indebted. The individual whose tax refund is thus
intercepted suffers no true loss, for the intercepted sum serves to
discharge, dollar for dollar, his legal liability on a pre-existing
debt. Congress designed the intercept program as an equitable and
low-cost alternative to more traditional collection devices, such as
garnishment, seizure of property, and judicial sales, which often
prove as onerous to debtors as they are costly and cumbersom for
creditors.
The question presented here is whether amounts due to be refunded
to a person of an earned income credit are subject to interception
under this program. The language of the relevant statues, the overall
statutory scheme, and the underlying legislative policy make it clear
that the court of appeals correctly answered this question in the
affirmative.
A. Because An Excess Earned Income Credit Is Defined As An
Overpayment Of Tax, And Because It Is Paid To The Recipient As A
Refund Of Tax, It Is Subject To Interception Under The Plain Language
Of The Relevant Statutes
1. As in effect during 1981, Section 43(a) of the Internal Revenue
Code provided a credit against income tax based on a percentage of an
eligible taxpayer's "earned income" (26 U.S.C. 43(a)). An eligible
taxpayer was defined to include a surviving spouse, a head of
household, and a married person whose child lived in the same home (26
U.S.C. 43(c)(1)). The maximum credit allowable was $500. The credit
was reduced proportionately to the extent a taxpayer's adjusted gross
income exceeded $6,000 but was less than $10,000. No credit was
allowable to an individual whose adjusted gross income exceeded
$10,000. 26 U.S.C. 43(a) and (b). /5/
Originally enacted in 1975, the earned income credit was intended
to correspond roughly to the burden placed on low-income workers by
the social security payroll tax. By offsetting that burden, Congress
aimed to provide such individuals with an incentive to remain employed
rather than to rely on welfare assistance. R. Rep. 94-36, 94th Cong.,
1st Sess. 11, 33 (1975). Congress also hoped that the earned income
credit would stimulate the economy, since low-income persons were
expected to spend a large portion of their thus-increased disposable
funds. Id. at 11. See generally Nelson v. Regan, 731 F.2d at
110-111.
Unlike most federal tax credits, the earned income credit has
always been "refundable." Most tax credits serve only to reduce or
offset the tax that would otherwise be due for a particular year; if
a taxpayer's aggregate credits exceed his tax liability, the excess is
generally useless to him unless it can be carried over to another tax
year. See, e.g., IR.C. Section 39 (carryback and carryforward of
certain unused credits). The earned income credit, however, like a
few other credits, /6/ is "refundable" in that it generates a cash
refund from the Treasury to the extent it exceeds a person's tax
liability for the period at issue. For this reason, the earned income
credit is sometimes referred to as a "negative income tax."
The statutory mechanism by which certain tax credits, including
earned income credits, are made refundable is embodied in Sections
6401 and 6402 of the Code. Enacted in 1954, those Sections generally
authorize the Commissioner to credit or refund "overpayments" as there
defined (68A Stat. 791). In normal parlance, of course, an excess
earned income credit would not be called an "overpayment," since it
does not correspond to any tax actually paid. Upon amending the Code
in 1975 to provide for earned income credits, however, Congress
likewise amended Section 6401, which is entitled "Amounts treated as
overpayments." Tax Reduction Act of 1975, Pub. L. No. 94-12, Section
204(a) and (b)(1), 89 Stat. 30-31. As amended in 1975, Section
6401(b), entitled "Excessive credits," provided:
If the amount allowable as credits under sections 31
(relating to tax withheld on wages), 39 (relating to certain
uses of gasoline, special fuels, and lubricating oil), 43
(relating to earned income credit), and 667(b) (relating to
taxes paid by certain trusts) exceeds the tax imposed by
subtitle A (relating to income taxes) * * * , the amount of such
excess shall be considered an overpayment.
26 U.S.C. (Supp. V 1975) 6401(b). Section 6402(a) of the Code, in
turn, provided that, "(i)n the case of any overpayment, the Secretary
* * * may credit the amount of such overpayment * * * against any
liability in respect of an internal revenue tax on the part of the
person who made the overpayment and shall refund any balance to such
person." 26 U.S.C. (1976 ed.) 6402(a). It was these two provisions
which, prior to 1981, enabled taxpayers to claim, and the Commissioner
to make, refunds of the sort petitioner and her husband requested
here, i.e., a refund comprising a credit for excess wage-withholding
tax and an excess earned income credit. See Pet. App. A4. /7/
2. In 1981, Congress established the tax refund intercept program
by amending Section 6402 of the Code and adding a new provision to the
Social Security Act. Omnibus Budget Reconciliation Act of 1981, Pub.
L. No. 97-35, Section 2231, 95 Stat. 860. Section 6402(a) was amended
to provide that the Commissioner may credit an overpayment, which
continued to be defined in Section 6401, against a person's tax, "and
shall, subject to subsection (c), refund any balance to such person"
(26 U.S.C. 6402(a)). A new subsection (c) was then added, providing as
follows (26 U.S.C. 6402(c)):
Offset of past-due support against overpayments
The amount of any overpayment to be refunded to the person
making the overpayment shall be reduced by the amount of any
past-due support (as defined in section 464(c) of the Social
Security Act) owned by that person of which the Secretary has
been notified by a State in accordance with section 464 of the
Social Security Act. The Secretary shall remit the amount by
which the overpayment is so reduced to the State to which such
support has been assigned and notify the person making the
overpayment that so much of the overpayment as was necessary to
satisfy his obligation for past-due support has been paid to the
State. This subsection shall be applied to an overpayment prior
to its being credited to a person's future liability for an
internal revenue tax.
The operation of new Code Section 6402(c) was bolstered by the
addition of Section 464 to the Social Security Act (42 U.S.C. 664).
Section 464(c) defined "past-due support" as "the amount of a
delinquency, determined under a court (or administrative) order, * * *
for support and maintenance of a child, or of a child and the parent
with whom the child is living." Section 464(b) mandated the issuance
of regulations prescribing procedures by which state agencies should
provide notices of past-due support to the Secretary of the Treasury.
And Section 464(a) provided:
Upon receiving notice from a State agency * * * that a named
individual owes past-due support which has been assigned to such
State pursuant to (Section 402(a)(26) of the Social Security
Act), the Secretary of the Treasury shall determine whether any
amounts, as refunds of Federal taxes paid, are payable to such
individual (regardless of whether such individual filed a tax
return as a married or unmarried individual). If the Secretary
of the Treasury finds that any such amount is payabke, he shall
withhold from such refunds an amount equal to the past-due
support, and pay such amount to the State agency * * * .
3. "(A)s with any case involving the interpretation of a statute,
(the) analysis must begin with the language of the statute itself."
Touche Ross & Co. v. Reddington, 442 U.S. 560, 568 (1979). The
language of the statutes involved here plainly shows that amounts
refundable to taxpayers because of excess earned income credits, like
all other amounts refundable to taxpayers for any reason, are subject
to the tax refund intercept program.
As noted above, Section 6401(b) of the Code defines an
"overpayment" to include an excess earned income credit. Section
6402(a), which by its terms applies "(i)n the case of any
overpayment," and which authorizes the Commissioner to credit or
refund overpayments generally, provides that any such refund shall be
made "subject to subsection (c)." And Section 6402(c), which likewise
applies in the case of "any overpayment," provides that "(t)he amount
of any overpayment to be refunded * * * shall be reduced by the amount
of any past-due support." Reading these three provisions together, it
seems obvious that earned income credits are subject to interception.
The necessary effect of the integrated statutory scheme is to
authorize the refund of any excess earned income credit, but, at the
same time, to require that the amount of any such refund be reduced by
any past-due support for which the taxpayer is liable. Indeed, the
words of the statute, construed in light of normal rules of English
grammer and syntax, admit of no other conclusion.
The language of Section 464(a) of the Social Security Act leads
inevitably to the same result. It provides that the Secretary of the
Treasury "shall determine whether any amounts, as refunds of Federal
taxes paid, are payable to (an) individual" delinquent in child
support (42 U.S.C. 664(a)). As shown above, "amounts * * * payable
to" an individual because of an excess earned income credit are
payable "as refunds of Federal taxes paid," given the necessary
operation of the relevant Code provisions. Section 464(a) then goes
on to require that, "(i)f the Secretary of the Treasury finds that any
such amount is payable, he shall withhold from such refunds an amount
equal to the past-due support, and pay such amount to the State."
Congress could scarcely have chosen words to evidence more clearly its
intent that all amounts payable as tax refunds, regardless of their
statutory source within the Internal Revenue Code, are subject to
interception for delinquencies in child support.
4. A. In an effort to construe the statutes to immunize earned
income credits from interception, petitioner subjects the statutory
language to constraints that would make Procrustes' victims cringe.
Her argument proceeds in three steps. First, she contends that
Section 464(a) of the Social Security Act authorizes interception only
of refunds of taxes actually paid by a taxpayer (Pet. Br. 14). The
earned income credit, she notes, may entitle a taxpayer to a cash
payment in excess of his tax liability, and may entitle a person to a
cash payment even if he owes or pays no tax (id. at 15-16). She
accordingly concludes that a payment attributable to an excess earned
income credit is not a "refund of Federal taxes paid" within the
meaning of Section 464(a), but rather is in the nature of a welfare
grant through the mechanism of the tax refund process (Pet. Br. 14-16
. In essence, this is the reasoning adopted by the two courts of
appeals that have held earned income credits exempt from interception.
See Rucker v. Secretary of the Treasury, 751 F.2d at 356-357; Nelson
v. Regan, 731 F.2d at 111-112. Contra, Coughlin v. Regan, 584 F.
Supp. 697, 706-707 (D. Me. 1984), aff'd on other grounds, No. 84-2015
(1st Cir. July 25, 1985).
The second step of petitioner's argument focuses on the first
sentence of Section 6402(c), which may conveniently be quoted once
again in full:
The amount of any overpayment to be refunded to the person
making the overpayment shall be reduced by the amount of any
past-due support (as defined in section 464(c) of the Social
Security Act) owed by that person of which the Secretary has
been notified by a State in accordance with section 464 of the
Social Security Act.
Petitioner zeroes in on the concluding words of the sentence, "in
accordance with section 464 of the Social Security Act." She admits
that "one might initially assume" (Pet. Br. 18) that these words
modify the immediately preceding clause, viz., "of which the Secretary
has been notified by a State." She rejects that construction, however,
contending that Section 464 of the Social Security Act "d(oes) not
impose requirements on states," so that there is assertedly "nothing
in (that) section with which states could act in accordance" (Pet. Br.
18 & n.12). Instead, petitioner argues that the concluding words of
the sentence "belatedly modify the words 'shall be reduced'" (id. at
18), words which occur (depending on how one counts) some two clauses,
four phrases, and 31 words earlier. Since earned income credits, per
step one of petitioner's argument, are not "refunds of Federal taxes
paid" under Section 464, and since, per step two of her argument,
Section 6402 requires refundable overpayments to be "reduced * * * in
accordance with" Section 464, Section 6402(c) on petitioner's view is
inapplicable to earned income credits.
The third step of petitioner's argument addresses Section 6401(b).
She does not have much to say about this, except to note that it "is a
general provision adopted before, and independently of, the intercept
law" (Pet. Br. 20). Presumably, petitioner means to contend that
Section 6401(b)'s definition of "overpayment" to include an excess
earned income credit does not apply to Section 6402(c), even though
Section 6402(c) requires reduction of "any overpayment" by the amount
of past-due child support, because the two sections were not enacted
contemporaneously. The Tenth Circuit has taken essentially the same
approach to Section 6401(b). Rucker v. Secretary of the Treasury, 751
F.2d at 357. The Second Circuit, more frank to acknowledge the
difficulty of that approach, has taken refuge in the notion that
"(l)ogic and symmetry have never been the hallmarks of the Internal
Revenue Code." Nelson v. Regan, 731 F.2d at 111-112.
b. Each step of petitioner's argument is seriously flawed. To
begin with, Section 464(a) of the Social Security Act does not speak
merely of "refunds of Federal taxes paid" by a taxpayer (Pet. Br. 14).
Rather, it mandates interception of "any amounts, as refunds of
Federal taxes paid, (which) are payable to (an) individual." In order
to determine whether amounts are payable to an individual "as refunds
of Federal taxes paid," it is necessary to consult the relevant
provisions of the Internal Revenue Code. As we have shown, those
provisions clearly provide that amounts payable to individuals because
of excess earned income credits are payable "as refunds of Federal
taxes paid." Indeed, there is no other way in which such amounts can
find their way into taxpayers' hands. That is why Congress has
denominated earned income credits, like four other species of credits,
"refundable credits" in Subtitle A, Chapter I, Subchapter A, Part IV,
Subpart C of the Internal Revenue Code.
Petitioner's approach to Section 6402(c) is equally erroneous. It
is a commonplace of statutory construction that qualifying phrases are
to be read as applying to the immediately preceding phrase or clause,
and not to phrases or clauses more remote. K. Llewellyn, The Common
Law Tradition 527 (1960). There is a venerable doctrine -- "the
doctrine of the last antecedent" -- to this effect. See First Charter
Financial Corp. v. United States, 669 F.2d 1342, 1350 (9th Cir. 1982);
Quindlen v. Prudential Insurance Co., 482 F.2d 876, 878 (5th Cir.
1973); Mandina v. United States, 472 F.2d 1110, 1112 (8th Cir. 1973).
Application of this rule here requires that the words "in accordance
with section 464 of the Social Security Act" modify "of which the
Secretary has been notified by a State," the clause that immediately
precedes. Contrary to petitioner's contention (Pet. Br. 18 n.12),
this construction produces a perfectly sensible result. Section
464(b) of the Social Security Act directs the issuance of regulations
"prescribing the time or times at which States must submit notices of
past-due support, the manner in which such notices must be submitted,
and the necessary information that must be contained in or accompany
the notices." When the Secretary is so notified, obviously, he is
"notified by a State in accordance with section 464 of the Social
Security Act."
Petitioner's approach to Section 6401(b), finally is perhaps the
weakest link in her chain of argument. The Internal Revenue Code does
not throw words around lightly. The word "overpayment" is a term of
art that appears 103 times in 64 different sections of the Code. Its
meaning is critical to the operation of many of the Code's most
important procedural and jurisdictional provisions. Section 6401(b)
provides unequivocally that, where the amount of certain credits,
including earned income credits, exceeds the tax liability, "the
amount of such excess shall be considered an overpayment." Nothing on
the face of Section 6401 suggests that this definition is meant to
apply to some Code sections but not to others. To the contrary,
Section 6401 is the first section appearing in a subchapter entitled
"Procedure in General," and it evidently sets forth a rule of
generalized application. Nor is there anything on the face of Section
6402(c) to suggest that the definition of "overpayment" set forth in
Section 6401 -- which, after all, is the immediately preceding Section
-- does not apply to it. Indeed, Section 6402(c) says that the amount
of "any overpayment" shall be reduced by past-due child support, and
its language is thus inclusive rather than exclusive.
Besides giving "overpayment" different meanings in Sections 6401(b)
and 6402(c), petitioner's argument makes "overpayment" mean different
things within Section 6402 itself. Petitioner would have to concede
that Section 6401(b)'s definition of "overpayment" applies to Section
6402(a), which authorizes the Commissioner to credit or refund
overpayments. Were this not so, the Commissioner would have had no
authority to refund to petitioner her one-half community share of the
marital refund, which consisted of an excess earned income credit and
a credit for excess wage withholding. See Pet. App. A4. Petitioner's
argument thus reduces to a contention that Section 6401(b)'s
definition of "overpayment" applies to Section 6402(a), authorizing
refunds of overpayments, but not to Section 6402(c), mandating
reduction of overpayments. Such a construction, needless to say,
would be disfavored in any circumstances. But it would be
particularly anomalous here, since Section 6402(a)'s authorization to
refund overpayments is conditioned by the explicit cross-reference,
"subject to subsection (c)."
It has long been settled that statutes, wherever possible, should
be construed consistently with one another, E.g., Weinberger v.
Hynson, Wescott & Dunning, Inc., 412 U.S. 609, 633-634 (1973);
Woodward v. Commissioner, 397 U.S. 572, 575 (1970); United States v.
Gilmore, 372 U.S. 39, 49 (1963). The construction we urge is faithful
to that goal. The construction petitioner urges, by contrast,
requires that the same word be given different meanings in contiguous
and interrelated sections of the Code, even in cross-reference
subsections of the same section. The sole justification she offers
for thus departing from customary rules of statutory construction is
that the various provisions involved were not contemporaneously
enacted (Pet. Br. 20). Given the frequency with which Congress amends
the Internal Revenue Code, and the frequency with which its numerous
terms of art recur, petitioner's view, if accepted, would make the
Code, not always a model of clarity even to its admirers, a confusing
piece of work indeed.
B. The Construction Dictated By The Statutes' Plain Language Is
Supported By Related Statutory Provisions And By The Overall Statutory
Scheme
In interpreting legislation it is appropriate to consider, not only
the applicable words of its particular provisions, but "'the whole
statute (or statutes on the same subject) and the objects and policy
of the law.'" Kokoszka v. Belford, 417 U.S. 642, 650 (1974) (quoting
Brown v. Duchesne, 60 U.S. (19 How.) 183, 194 (1956)). The statutory
antecedents of the tax refund intercept provisions, as well as their
general context, firmly support the plain-language construction that
we have outlined above.
1. The tax refund intercept program, as we have already intimated
(pages 10-11, supra), was not Congress's first attempt to grapple with
the problem of parents who desert, abandon, or otherwise fail to
support their children. As early as 1950, Congress required that all
state ADDC plans provide for "prompt notice to appropriate
law-enforcement officials" when aid was furnished to a deserted or
abandoned child. Social Security Amendments of 1950, ch. 809, Section
321(b), 64 Stat. 549-550. In 1967, Congress required the states to
ascertain the paternity of children receiving AFDC assistance and to
collect support payments on the children's behalf. Social Security
Amendments of 1967, Pub. L. No. 90-248, Sections 201(a)(1), 211(a), 81
Stat. 877-879, 896-897. The states were required to enter into
"cooperative arrangements with appropriate courts and law enforcement
officials" to carry out these child-support functions. Id. Section
201(a)(1). The 1967 Act also involved the IRS in this enterprise for
the first time, directing the Commissioner, where possible, to provide
state agencies with the current addresses of parents delinquent in
child support. Id. Section 211(b) (originally codified at 42 U.S.C.
(1970 ed.) 410 (repealed in 1975)).
The statutory antecedents most relevant here are those enacted in
1975. Social Services Amendments of 1974, Pub. L. No. 93-647, Section
101, 88 Stat. 2351-2361. Their enactment was prompted by Congress's
determination that "most States have not implemented in a meaningful
way the provisions of present law relating to the enforcement of child
support and establishment of paternity." S. Rep. 93-1356, supra, at
46. Congress accordingly concluded that "new and stronger legislative
action is required in this area which will create a mechanism to
require compliance with the law" (ibid.).
The mechanism that Congress adopted in 1975 entailed expanded
participation by federal health and welfare officials, the IRS, and
the states. For the first time, applicants for AFDC assistance were
required, as a condition of elibibility, to assign to the states any
rights to support that they possessed. Pub. L. No. 93-647, Section
101(c)(5), 88 Stat. 2359 (adding 42 U.S.C. 602(a)(26)). If a state,
despite "diligent and reasonable efforts," was unable to collect
through its own collection devices the amounts thus assigned, it was
entitled to request assistance from the Secretary of HEW. Pub. L. No.
93-647, Section 101(a), 88 Stat. 2351 (adding 42 U.S.C. 652(b)). The
Secretary of HEW in turn was required (ibid.) to certify the amount of
any past-due child support to the Secretary of the Treasury "for
children pursuant to the provisions of section 6305 of the Internal
Revenue Code," which was newly enacted for this purpose. Pub. L. No.
93-647, Section 101(b)(1), 88 Stat. 2358 (adding U.S.C. 6305).
Section 6305(a) of the Code provides that the Commissioner, upon
receiving certification that a person is delinquent in child support,
"shall assess and collect the amount (thus) certified * * * in the
same manner, with the same powers, and (except as provided in this
section) subject to the same limitations as if such amount were a tax
imposed by subtitle C (relating to employment taxes) the collection of
which would be jeopardized by delay." /8/ By empowering the
Commissioner to collect past-due child support as if it were a
delinquent tax, Section 6305 authorizes the IRS to use its full
panoply of tax collection tools -- levy and distraint, sale of seized
property, lien-foreclosure suits -- against "all property and rights
to property * * * belonging to" a person whose child-support payments
are in arrears. I.R.C. Sections 6321, 6331(a), 6335, 7403(a). See
generally United States v. National Bank of Commerce, No. 84-498 (June
26, 1985), slip op. 6-8. Indeed, the scope of the Commissioner's
power to collect past-due child support under Section 6305 is in some
respects greater than the scope of his power to collect taxes, since
some property that is exempt from levy in satisfaction of unpaid taxes
-- such as unemployment benefits and certain pension payments -- is
explicitly made subject to levy where collection of child-support
delinquencies is concerned. See I.R.C. Section 6305(a)(2),
cross-referring to I.R.C. Section 6334(a)(4), (6) and (8).
2. For the past ten years, Section 6305 of the Code, in conjunction
with Section 452(b) of the Social Security Act, has authorized the IRS
to collect duly-certified past-due support from assets in the hands of
delinquent parents. Thus, if a delinquent parent prior to 1981 had
filed a claim for a tax refund, and if the IRS had mailed him a refund
check, the Service could thereafter have levied on that check or its
proceeds in satisfaction of the recipient's child-support delinquency.
See Treas. Reg. Section 301.6305-1(b)(4)(i) (1978). And it would
have made no difference in this respect if that refund had had an
earned-income-credit component. Neither Section 6305 nor Section 6334
exempts refundable earned income credits from levy, and that component
of the refund, like all its other components, would have become part
of the delinquent parent's "property (or) rights to property" (I.R.C.
Section 6331) subject to seizure and remittance to the state. See
Note, In Support of Support: The Federal Tax Refund Offset Program,
37 Tax Law. 719, 723, 739 (1984).
This being so, it is difficult to believe that Congress intended in
1981 to immunize the earned-income-credit component of tax refunds
from collection through the newly-enacted intercept program.
Explaining that program, Congress said that "(t)he authority which is
provided in current law (i.e., in Code Section 6305) for collection by
the Internal Revenue Service of amounts which represent delinquent
child support payments would be amplified." H.R. Conf. Rep. 97-208,
97th Cong., 1st Sess. 985 (1981). Congress thus evidenced its
intention to augment the Commissioner's existing authority to collect
past-due child support by giving him a new -- and, Congress believed,
a more streamlined and cost-effective -- collection device. Rather
than require the IRS to search out and take collection action against
assets in the delinquent parent's possession, the intercept program
enables the Commissioner to take assets in his own possession --
refunds due the delinquent -- and remit them directly to the state.
It is absolutely clear that the IRS under Section 6305 can seize an
earned income credit, once refunded, from its recipient. See Treas.
Reg. Section 301.6305-1(b)(4)(iii), cross-referring to Treas. Reg.
Section 301.6401-1. In contending that such amounts cannot be
intercepted, therefore, petitioner would require the IRS to send
delinquent parents a check for the earned-income-credit portion of
their refund, and then turn around and take whatever collection action
is necessary to get the money back once the check is in the mail.
There is no reason to believe that Congress intended such an anomalous
result. /9/
C. Considerations Of Equity And Social Policy Are Consistent With A
Plain-Language Construction Of The Statutes
It is of course well established that "(t)he plain language of (a
statute) is controlling unless a different legislative intent is
apparent from the (statute's) purpose and history." Jefferson County
Pharmaceutical Ass'n v. Abbott Laboratories, 460 U.S. 150, 157 (1983).
As we have shown, the plain language of the statutes involved here
demonstrates that refunds attributable to earned income credits, like
all other amounts payable as refunds of federal taxes, are subject to
interception for past-due child support. There is nothing in the
legislative history that suggests a different conclusion; indeed, the
evolution of the overall statutory scheme strongly supports the
construction we urge. Under these circumstances, the court of appeals
was correct in declining to speculate about social policy factors in
reaching its decision (Pbt. App. A19-A20 & n.1).
Considerations of social policy, in any event, amply support
Congress's resolution of the issue. Petitioner describes the earned
income credit as a species of social welfare legislation and contends
that its objective of providing aid to poor families "would be
frustrated by allowing the interception of earned income credit(s)"
(Pet. Br. 21). The tax refund intercept program, however, involves a
social policy of comparable importance -- Congress's determination to
respond to the increasing failure of divorced and separated parents to
honor their child-support obligations. For the past 35 years,
Congress has drawn steadily and with increasing frequency on the
resources of the federal government to help states cope with this
problem, a problem that in Congress's view has been largely
responsible for the "rapid and uncontrolled growth of families on
AFDC." S. Rep. 93-1356, supra, at 44. /10/ As an indication of the
depth of its concern, Congress has provided that debts for
child-support obligations assigned to a state are not dischargeable in
bankruptcy. Omnibus Budget Reconciliation Act of 1981, Pub. L. No.
97-35, Section 2334, 95 Stat. 863 (adding 42 U.S.C. 656(b) and
amending 11 U.S.C. 523(a)(5)(A)). Congress has also empowered the IRS
to collect child-support debts by levying on unemployment benefits,
which for reasons of social policy are exempt from tax levies
generally. I.R.C. Section 6305(a)(2), cross-referring to I.R.C.
Section 6334(a)(4). The welfare budgets of many states rely on
child-support collections to help fund their AFDC plans, and thus to
continue the provision of aid to currently needy families. The
intercept program has proved a most effective method of making such
collections, /11/ and earned income credits represent a sizable
component of the sums thus collected. /12/
Contrary to petitioner's contention (Pet. Br. 12), moreover, there
is no conflict between the tax refund intercept program and the
legislative policy behind earned income credits. The intercept
program has no effect on a person's entitlement to an earned income
credit. If one is entitled to a credit, he receives the full benefit
of it, despite its interception, because it is applied to discharge
his legal liability on a pre-existing debt.
Indeed, in invoking the social policy behind earned income credits,
petitioner's brief often reads as if the question presented were
whether they can, or cannot, be used to discharge a child-support
debt. It is absolutely clear, however, that earned income credits can
be so used; the only question concerns the collection mechanisms that
the creditor may employ against them. Petitioner's husband owes money
to the State of Washington, and his child-support debt will be subject
to collection in one way or another. The State might collect it,
using such ordinary creditors' remedies as contempt proceedings,
garnishment, or attachment of property, from any of his nonexempt
assets, including his share of the 1981 joint tax refund. See 45
C.F.R. 303.6. Alternatively, if those efforts were unsuccessful, the
State could certify the amount of his delinquency for collection by
the IRS under Code Section 6305, and the IRS likewise could collect
that debt, using such extraordinary remedies as levy and distraint,
from any of his nonexempt assets, including his share of the 1981
joint tax refund. The only question presented here is whether the
State and the IRS should be required to rely exclusively on these
collection devices, or whether they should also be permitted in the
case of earned income credits, as they are permitted in the case of
tax refunds generally, to use the more efficient and less expensive
intercept procedure that Congress adopted in 1981. The costs of
collecting delinquent child support will be borne in either event by
the social welfare system. It does poor people no good to insist that
the transaction costs incident to collection be maximized. /13/
Finally, there are no special equities that would support a
different result for petitioner and her husband in particular. As
noted above (page 4, supra), the IRS has retained only that portion of
the tax refund (including the earned income credit) that belongs to
her husband, the party whose child-support payments are delinquent.
It is true that all the income reported on the tax return came from
petitioner's wages. Washington is a community property state,
however, and under its law a tax refund is community property
regardless of which spouse's earnings generated the tax (Pet. App.
A46). The result is that half of the joint refund belongs to
petitioner's husband and was interceptable to discharge his debt.
Petitioner did not seek review of that state law holding below and
cannot complain of its result here (see Pet. Br. 27 & n.19).
CONCLUSION
The judgment of the court of appeals should be affirmed.
Respectfully submitted.
CHARLES FRIED
Solicitor General
GLENN L. ARCHER, JR.
Assistant Attorney General
ALBERT G. Lauber, JR.
Assistant to the Solicitor General
MICHAEL L. PAUP
RICHARD FARBER
STEVEN I. FRAHM
Attorneys
NOVEMBER 1985
/1/ These contentions were based chiefly on the Anti-Injunction
Act, the tax exception to the Declaratory Judgment Act, procedural
limitations on refund suits, and sovereign immunity (Pet. App.
A33-A39). To the extent the government renewed these arguments on
appeal, the Ninth Circuit likewise rejected them (id. at A6-A13), and
we have not sought review of those questions here.
/2/ The class consists of all residents of the State of Washington
who are situated similarly to petitioner and who filed joint federal
income tax returns for 1981 (Pet. App. A40). Although the government
unsuccessfully opposed class certification in the courts below (id. at
A13-A14, A39-A41), we have not sought review of that question here.
/3/ Petitioner had contended that no portion of the redund -- i.e.,
neither the part attributable to the earned income credit nor the part
attributable to excess withholding from her wages -- was subject to
interception, pointing out that the refund stemmed exclusively from
her earnings and contending that it could not be garnished to satisfy
her husband's separate, pre-marital debts under Washington community
property law (Pet. App. A43-A44). The district court rejected this
argument (id. at A44-A54) and petitioner did not renew her state law
contention on appeal (see i.e., at A5-A6). No state law issues are
presented here. See Pet. Br. 9-10 & n.6.
/4/ Congress subsequently amended the Social Security Act
explicitly to require, in the case of refunds payable after December
31, 1985, the giving of notice substantially similar to that ordered
by the district court. Child Support Enforcement Amendments of 1984,
Pub. L. No. 98-378, Section 21, 98 Stat. 1322-1326 (amending 42 U.S.C.
664). The government did not appeal the notice issue in this case,
and the IRS has generally implemented, in advance of Congress's
enactment, comparable notice procedures on a nationwide basis. No due
process question is raised here. See Pet. Br. 9-10.
/5/ In 1984, Congress redesignated Section 43 as Section 32 and
modified the dollar limitations on the earned income credit. Deficit
Reduction Act of 1984, Pub. L. No. 98-369, Section 471(c)(1), 98 Stat.
826. Under new Section 32 of the Code, the maximum amount of the
credit is $550, and the credit is reduced proportionately as a
taxpayer's adjusted gross income rises from $6,500 to $11,000. No
credit is allowable to an individual whose adjusted gross income
exceeds $11,000. I.R.C. Section 32(a) and (b).
/6/ "Refundable credits," whose identity has varied considerably
over the years, are now codified in Section 31 to 35 of the Code.
They include the credit for tax withheld on wages (I.R.C. Section 31),
the earned income credit (I.R.C. Section 32), the credit for tax
withheld at the source in the case of foreign taxpayers (I.R.C.
Section 33), the credit for certain uses of gasoline and special fuels
(I.R.C. Section 34), and the credit for tax overpayments (I.R.C.
Section 35).
/7/ Section 6401 has undergone several permutations of a technical
nature since 1975, none of which affects the question presented here.
In 1976, the reference to "(section) 667(b) (relating to taxes paid by
certain trusts)" was deleted as a conforming amendment to changes
elsewhere in the Code. Tax Reform Act of 1976, Pub. L. No. 94-455,
Section 701(f)(2) and (3), 90 Stat. 1580. In 1984, Section 6401(b)
was rewritten to reflect the renumbering and regrouping of the various
Code sections providing for refundable credits. Deficit Reduction Act
of 1984, Pub. L. No. 98-369, Section 474(r)(36), 98 Stat. 846.
/8/ In providing that the certified amount shall be treated as if
it were an employment tax whose collection would be jeopardized by
delay, Section 6305(a) means that the Commissioner is empowered to
assess, demand payment for, and collect the amount at once, without
regard to the procedural restrictions that apply to jeopardy
assessments of income taxes. See I.R.C. Section 6862 (governing
jeopardy assessment of employment taxes); I.R.C. Section 6331(a)
(authorizing immediate levy where tax collection is in jeopardy). Cf.
I.R.C. Section 6861 (providing for deficiency procedures and Tax Court
petitions in the case of jeopardy assessments of income, estate, gift,
and certain excise taxes).
/9/ Although petitoner asserts (Pet. Br. 20) that "Congress did not
intend, and would not have sanctioned, the taking of earned income
credit(s)," she offers no evidence to support that assertion. As we
have shown, Congress plainly did sanction the taking of earned income
credits in 1975, when it empowered the IRS to levy on a delinquent
parent's assets in satisfaction of past-due child support and did not
exempt earned income credits from levy. Indeed, Section 6305,
authorizing collection of past-due support as if it were a delinquent
tax, and Section 43, creating earned income credits and authorizing
the refund of excess credits, were originally part of the same
legislative package (see S. Rep. 93-1356, supra, at 2), and were
ultimately enacted only three months apart. Compare Social Services
Amendments of 1974, Pub. L. No. 93-647, Section 101(b)(1), 88 Stat.
2358, with Tax Reduction Act of 1975, Pub. L. No. 94-12, Section
204(a), 89 Stat. 30. Petitioner attached much weight (Pet. Br. 24) to
the fact that Congress did not mention earned income credits when it
enacted the tax refund intercept program in 1981. But that is hardly
surprising. In establishing that program, Congress employed
all-inclusive language authorizing the interception of "any
overpayment to be refunded" and "any amounts )payable) as refunds of
Federal taxes." 26 U.S.C. 6402(c); 42 U.S.C. 664(a). Having used
such broad language, Congress obviously had no need to list the
various provisions of the Code (be they the earned income credit
provisions or otherwise) that might generate refunds to taxpayers.
/10/ Evidence before Congress in 1974 showed that about 80% of the
11 million persons then receiving AFDC assistance were "on the rolls
because they ha(d) been deprived of the support of a parent who ha(d)
absented himself from the home." S. Rep. 93-1356, supra, at 42. As of
early 1984, 8.7 million women headed families with minor children
whose fathers were not living in the household; of those women who
had been awarded child support, 25% received no payments at all, and
another 25% received less than the full payments to which they were
entitled. Bureau of the Census, U.S. Dep't of Commerce, Child Support
and Alimony: 1983, at 1 (July 1985).
/11/ The Department of Health and Human Services advises that the
intercept program accounts for about 20% of all AFDC collections of
past-due support. In recognition of the cost-effectiveness of
interception as a collection device, Congress has steadily expanded
its use. Effective for tax refunds paid after 1985, Congress has
authorized the interception of refunds on behalf of non-AFDC children,
as well as on behalf of those receiving AFDC assistance. Child
Support Enforcement Amendments of 1984, Pub. L. No. 98-378, Section
21, 98 Stat. 1322-1326 (amending 42 U.S.C. 664). See S. Rep. 98-387,
98th Cong., 2d Sess. 38-39 (1984). More broadly, Congress has
authorized the IRS to intercept tax refunds "(u)pon receiving notice
from any Federal agency that a named person owes to such agency a
past-due legally enforceable debt." Deficit Reduction Act of 1984,
Pub. L. No. 98-369, Section 2653, 98 Stat. 1153-1154 (to be codified
at 31 U.S.C. 3720A and I.R.C. Section 6402(d)). The latter enactment
will enable the use of interception to collect, e.g., student loans
and Small Business Administration loans that are in default. The
operative language of those provisions is virtually identical to the
language of the provisions involved here. Compare 31 U.S.C. 3720A(c)
(authorizing interception of "any amounts, as refunds of Federal taxes
paid, (which) are payable" to a person indebted to a federal agency)
with 42 U.S.C. 664(a) (same); and compare I.R.C. Section 6402(d)
(requiring offset of such debt against "the amount of any overpayment"
refundable to a delinquent) with 26 U.S.C. 6402(c) (same).
Petitioner's argument would thus serve to immunize earned income
credits from interception to discharge, not only child-support debts,
but almost any debt owed to the federal government.
/12/ The IRS advises that it intercepted over one million refunds
during the 1982-1984 calendar years. The total dollar amount of
earned income credits involved in these interceptions, the IRS
estimates, is approximately $141 million. The Department of Health
and Human Services estimates that earned income credits make up
between 15% and 20% of total collections under the intercept program.
/13/ As the court of appeals noted (Pet. App. A20 n.1), Congress
enacted the intercept program in part because it was perceived as an
equitable and relatively less onerous mode of collection than (say)
garnishment of wages or seizure of property. Congress has
specifically exempted certain amounts of wage and salary income from
levy in satisfaction of child-support delinquencies, recognizing that
individuals rely on such amounts for current living expenses. See
I.R.C. Sections 6305(a), 6334(a)(9) and (d). Tax refunds, by contrast,
are paid annually in a lump sum, and their diversion to discharge
child-support debts is unlikely, generally speaking, to impose
comparable hardships.
APPENDIX